Lex Hoogduin

The Impact of Newspapers on Consumer Confidence: Does Spin Bias Exist?

It is sometimes argued that news reports in the media suffer from biased reporting. Mullainathan and Shleifer (2002, 2005) argue that there are two types of media bias. One bias, called ideology, reflects a news outlets desire to affect reader opinions in a particular direction. The second bias, referred to as ‘spin’ or ‘slanting’, reflects the outlets attempt to simply create a memorable story. Competition between outlets can eliminate the effect of ideological bias, but increases the incentive to spin or slant stories. We examine whether we find some evidence of spin in Dutch newspaper reporting on the state of the economy. If newspapers are indeed able to create memorable stories this should, according to our hypothesis, affect the opinion of readers with respect to the state of the economy. Sentiments about the actual state of the economy could be magnified by spin. As a result, consumer confidence–a variable that routinely measures the opinion on the state of the economy–can be expected to be affected not only by economic fundamentals, but also by the way these fundamentals are reported. We construct a variable that reflects the way consumers perceive economic news reported in newspapers. We find that this variable indeed has a significant impact on consumer confidence, which is short-lived.

ON THE DIFFERENCE BETWEEN THE KEYNESIAN, KNIGHTIAN AND THE CLASSICAL-ANALYSIS OF UNCERTAINTY AND THE DEVELOPMENT OF A MORE GENERAL MONETARY-THEORY

SummaryIn this article it is shown that Keynes’ concept of uncertainty is not identical with that of Knight, as is often argued. The identification of Keynesian with Knightian uncertainty has contributed to the neglect of an aspect of Keynesian uncertainty that is important in understanding the functioning of a monetary economy. Therefore, it is concluded that monetary theory can benefit from the development of an analytical apparatus that incorporates all aspects of Keynesian uncertainty.

UNCERTAINTY IN OF MACROECONOMICS - AN ESSAY ON ADEQUATE ABSTRACTION

SummaryThe search for microfoundations for macroeconomics has been stimulated by uncertainty about the status of macroeconomics and is closely related to the neo-Walrasian research program. This relationship is explained and criticised, because it obscures the historical connection between macroeconomics and the study of monetary economies and leads to attempts to underpin a pretence of knowledge, which can never be justified. This paper argues that the question which neo-Wairasians try to solve is based on ignorance of the abstract nature of macroeconomics. Once this nature is taken into account, the question loses much of its relevance.

Overconfidence in monetary theory and monetary policy

In this chapter we argue that when it comes to present-day monetary theory and policy, economists suffer from myopia and are prone to herd behaviour. As a result, too many economists give too much weight to actual economic developments which can have an excessive impact on economic theory and policy. “Conservatively dressed central bankers may not look like fashion victims, yet they are as prone to the latest craze as anybody else. Remember when monetarism was all the rage? Then central bank independence became the ‘in’ thing. The latest fashion is for inflation targets.“ The Economist, 25 September 1999